SanJuan Expansion

[aredeeyou22]

I can't quote details, but suffice it to say that JetBlue's routes in and out of PR are some of the highest yielding in the system. Except when they're not (see FLL-PSE and -BQN, which are both gone). The incremental flying that they're adding, two flights per day, is not backfilling capacity to nearly the extent that it is being removed by AA. And in any case, I think RDU22 is confusing yield with cost. Yield is revenue per occupied seat per mile. Fuel has nothing to do with it. Your assertions that pax won't pay for TV's notwithstanding (ahem, the TV's don't work to SJU anyway...), JetBlue still gets more money per seat mile going there than for most of the routes it flies, so it makes sense to capture some of the (to them, high yielding) traffic that AA is abandoning.

Hope you're right.....

I realize yield has nothing to do with fuel, but adding capacity affects yield, no? Again, there is some reason why AA is reducing SJU by ~50%.

I also realize that B6's fleet may be more fuel efficient, but at $140/bbl oil, do the efficiences of an A320 make it profitable?

Why wouldn't B6 just keep 5 daily JFK-SJU, and enjoy a higher average fare? Could it be that there are no other cities to deploy excess aircraft profitably?

 

[Veritas]

And in any case, I think RDU22 is confusing yield with cost. Yield is revenue per occupied seat per mile. Fuel has nothing to do with it.

RASM - CASM = Yield.

Of course the cost of doing business, including fuel, has everything to do with yield.

 

[Blue Dude]

RASM - CASM = Yield.

Of course the cost of doing business, including fuel, has everything to do with yield.

Um, no. Just no. Yield = RASM/LF. It's a function of revenue, available capacity, and load factor. Yield has nothing to do with costs. Nothing at all.

RASM - CASM = operating profit per seat mile. Not at all a related metric.

 

[Blue Dude]

Why wouldn't B6 just keep 5 daily JFK-SJU, and enjoy a higher average fare? Could it be that there are no other cities to deploy excess aircraft profitably?

Some of those frequencies are seasonal, and would have been added back anyway. Happens every year. Perhaps two RT are in response to AA pulling out, not even close to replacing the capacity that's leaving the market. They are using aircraft that would have been sitting underutilized anyway. JB is removing a *lot* of capacity this fall, which means airplanes in heavy maintenance or otherwise working a lot less than usual. I would venture to say that the revenue guys have calculated that more money will be made with two more RT than would have been gained in the incremental revenue gained solely with rising ticket prices, even considering the cost of fuel. I don't think that they're adding SJU capacity at the expense of other city pairs, so in that sense I think you're right: there's nowhere else they'd rather deploy to, or they would be doing it already with airplanes that are already idle. Ultimately this looks like a measured competitive response to firm up a strongly performing market (for JB anyway) rather than a desperation move to fling planes around.

 

[FWAAA]

As fuel prices rise, they become a larger and larger percentage of total expenses. Accordingly, the non-fuel CASM advantage of B6 over AA becomes relatively smaller and smaller. When fuel was a dollar a gallon, B6 had a tremendous cost advantage over AA. At four dollars a gallon, not so much. Another great equalizer is a non-operating expense: Interest expense. B6's large debt load (which has been increasing lately) costs B6 more interest dollars per ASM than interest costs at AA.

I wish B6 the best of luck (in no small part because of my large long position in B6), but like I posted earlier, this looks like something out of the 1999 playbook and not the 2008 playbook. That part is troubling to me.

 

[Veritas]

Um, no. Just no. Yield = RASM/LF. It's a function of revenue, available capacity, and load factor. Yield has nothing to do with costs. Nothing at all.

RASM - CASM = operating profit per seat mile. Not at all a related metric.

You are right. I stand corrected.

MIT - Airline Data Project:

Passenger Yield
Measure of average fare paid per mile, per passenger, calculated by dividing passenger revenue by revenue passenger miles. Typically the measure is presented in cents per mile and is useful measure in assessing changes in fares over time. Yield is not useful for comparisons across markets and/or airlines, as it varies dramatically by stage length and does not incorporate load factor (unlike PRASM).

 

[Borescope]

I can't quote details, but suffice it to say that JetBlue's routes in and out of PR are some of the highest yielding in the system. Except when they're not.

You make no sense at all.

 

[Blue Dude]

That's what I get for trying to be cute. Many of the PR routes have comparatively high yields. But JB has dropped some PR routes in the recent past (I'm thinking of FLL-PSE and -BQN specifically) because they failed to work out. That's all I meant. Since AA dropped some frequencies, and some entire routes, if JB backfills without trying to replace all of the lost capacity, then they should be rewarded with continued comparatively high yields.